Global finance markets have wobbled on fears that a Democrat victory in the US Congressional elections could prompt less market-friendly policies in the world's biggest economy.

Investors watched nervously as jubilant Democrats seized power in the US House of Representatives for the first time since 1994 and edged closer to taking the Senate, pushing European and Asian equities lower and weighing also on the dollar.

European indices eased off fresh five-year highs struck the previous day, while Japanese shares tumbled by more than one percent, as investors also feared that a split in power in Washington would create legislative gridlock.

"The European market started slipping lower (on Wednesday) with the Democrats taking power from the Republicans, traditionally thought of as more business friendly," said Michael Davies, an analyst with the Sucden brokerage firm in London.

The DJ Euro Stoxx 50 index of top eurozone shares lost 0.41 percent to 4,055.98 points.

The US dollar meanwhile staged a slight retreat against the euro and the yen.

"Although the outcome of US elections is unlikely to have a huge effect on the greenback, there are many that argue that if the Democrats win control of the House of Representatives, this will lead to a rise in protectionist policies or to political deadlock that could slow reforms," Davies added.

However, oil market analysts dampened talk that the vote would have an immediate impact on US foreign policy in the oil-rich Middle East.

In Asia on Wednesday, Tokyo's benchmark Nikkei-225 shares index lost 1.08 percent to close at 16,215.74 points.

A Democratic majority in both houses would have some effect on the Tokyo market but such an outcome has already been priced in, said Hiroyuki Nakai, chief strategist at Tokai Tokyo Research Center.

"Even with Republicans in the minority, they will come up with active policies in the run-up to the next presidential elections (in 2008)," Nakai said.